what happened
The stock market had a moderately strong day on Tuesday, with all major market averages growing at less than 1%. However, mortgage giants Fannie Mae (OTC: FNMA) And Freddie Mack (OTC: FMCC) Were moving rapidly in the other direction. By 11 AM EST, both Fannie Mae and Freddie M were down about 17% on both days.
Image Source: Getty Images.
So what
Following the election, it was suggested that regulators could eventually release the two mortgage-finance giants from government patronage and force them to return to shareholder control before the Inside Biden Administration takes office in January. This means that investors will once again be able to share the profits of both companies – after a financial-crisis bailout, Fanny and Freddie’s profits go directly to the US Treasury.
However, a Wall Street Journal An interview with Treasury Secretary Steven Manuchein shows that this is unlikely to happen. In short, Munuchi suggested that he would not support the move to end the government patronage before the inauguration. And both companies cannot be privatized again without the signature of the Treasury Secretary.
Now what
To put it mildly, Fannie and Freddie are much more likely to be privatized under the Republican administration. That’s why President Trump was forced to complete it before leaving office. Advisers close to Biden have indicated that ending conservatism will not be a priority for the new administration, so it is unlikely to happen anytime soon.
In short, it just so happened that investors would be able to share in the profits of two mortgage giants for at least another few years. And this is what we are seeing reflected in their share prices today.
